Section 1. Short title and commencement

CHAPTER I PRELIMINARY 1. Short title and commencement. —(1) This Act may be called the Bilateral Netting of Qualified Financial Contracts Act, 2020. (2) It shall come into force on such date[1] as the Central Government may, by notification in the Official Gazette, appoint, and different dates may be appointed for different provisions of this Act. 1. 1 st October, 2020, vide notification No. S.O. 3463(E), dated 1st October, 2020 see Gazette of India, Extraordinary, Part II, sec. 3 (ii). (g) "collateral arrangement" means any margin, collateral or security arrangement or other credit enhancement related to or forming part of a netting agreement or one or more qualified financial contracts to which a netting agreement applies, and includes,— (i) a pledge or any other form of security interest in collateral, whether possessory or nonpossessory; (ii) a title transfer collateral arrangement; and (iii) any guarantee, letter of credit or reimbursement obligation by or to a party to one or more qualified financial contracts, in respect of those qualified financial contracts; or a netting agreement; (h) "insolvent party" means the party to a qualified financial contract in relation to which insolvency, winding up, liquidation, resolution, administration or similar proceedings have been instituted under any law for the time being in force in India or under the laws of any other country, including of its incorporation; (i) "margin" means the amount, form and type of collateral required as a performance bond for the purchase, sale or carrying of a qualified financial contract and includes— (A) initial margin which protects the transacting parties from potential future exposure likely to arise from future changes in the mark-to-market value of the qualified financial contract during the close-out and replace the position in the event of counterparty default; and (B) variation margin which protects the transacting parties from the current exposure that has already been incurred by one of the parties from changes in the mark-to-market value of the qualified financial contract after the transaction has been executed; (j) "netting" means determination of net claim or obligations after setting off or adjusting all the claims or obligations based or arising from mutual dealings between the parties to qualified financial contracts and includes close-out netting; (k) "netting agreement" means an agreement that provides for netting, and includes,— (i) an agreement that provides for the netting of amounts due under two or more netting agreements; and (ii) a collateral arrangement relating to or forming part of a netting agreement; (l) "non-insolvent party" means the party to a qualified financial contract that is not the insolvent party; (m) "notification" means a notification published in the Official Gazette and the term "notify" shall be construed accordingly; (n) "qualified financial contract" means a qualified financial contract notified by the authority under clause (a) of section 4; (o) "qualified financial market participant" includes,— (i) a banking institution, or a non-banking financial company, or such other financial institution which is subject to regulation or prudential supervision by the Reserve Bank of India; (ii) an individual, partnership firm, company, or any other person or body corporate whether incorporated under any law for the time being in force in India or under the laws of any other country and includes any international or regional development bank or other international or regional organisation; (iii) an insurance or reinsurance company which is subject to regulation or prudential supervision by the Insurance Regulatory and Development Authority of India established under the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999); (iv) a pension fund regulated by the Pension Fund Regulatory and Development Authority established under the Pension Fund Regulatory and Development Authority Act, 2013 (23 of 2013) ; (v) a financial institution regulated by the International Financial Services Centres Authority established under the International Financial Services Centres Authority Act, 2019 (50 of 2019); and (vi) any other entity notified by the relevant authority under clause (b) of section 4; (p) "Schedule" means the First Schedule or the Second Schedule to this Act; (q) "title transfer collateral arrangement" means a margin, collateral or security arrangement related to a netting agreement based on the transfer of title to collateral, whether by outright sale or by way of security, including a sale and repurchase agreement, securities lending agreement, securities, buy or sell-back agreement or an irregular pledge. (2) Words and expressions used but not defined in this Act and defined in the Reserve Bank of India Act, 1934 (2 of 1934), the Insurance Act, 1938 (4 of 1938), the Banking Regulation Act,1949 (10 of 1949), the Securities Contracts (Regulation) Act, 1956 (42 of 1956), the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970), the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980), the Securities and Exchange Board of India Act,1992 (15 of 1992), the Foreign Exchange Management Act,1999 (42 of 1992), the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999), the Payment and Settlement Systems Act, 2007 (51 of 2007), the Companies Act, 2013 (18 of 2013) the Pension Fund Regulatory and Development Authority Act, 2013 (23 of 2013) and the Insolvency and Bankruptcy Code, 2016 (31 of 2016), shall have the meanings respectively assigned to them in those enactments.